German manufacturing sector begins 2023 with demand challenges

ISTANBUL

The German manufacturing sector's struggle with demand conditions continued in 2023, but confidence grew as cost pressure subsided.

According to S&P Global's report released on Wednesday, decreasing new orders continued to weigh on the sector's performance in January.

The purchasing managers' index (PMI) of the sector was at 47.3 in January, slightly up from 47.1 in December.

Although the index has been increasing for the last three months, it is still below 50, which indicates a negative outlook.

Phil Smith, an economics associate director at S&P Global, said: "There was sustained downward pressure on output levels at the start of the year, particularly across the intermediate goods sector, which has felt the effects of a sharp reduction in demand for inputs."

He added that after concerns about the outlook only a few months ago, German manufacturers are optimistic currently toward growth prospects.